Is Factoring the Soccer of the Funding World?

September 25, 2015

At a recent global factoring conference in Poland, a report placed the global market for invoice factoring at $3 trillion. Almost two thirds of those transactions originated in Europe, while less than 10 percent came from the United States.

The global popularity of factoring, and its relative obscurity here in the United States suggest that the practice – that is, getting cash by selling the value of what your customers owe you before they pay it – might be to the funding world what soccer is to sport.

Both factoring and soccer are gaining in popularity, which is nice, for many reasons, but especially nice for small businesses, which are learning what has long been apparent to their peers around the world: You don’t have to borrow money to get cash.

It took the Great Recession to open eyes here at home, but as banks ratcheted up their lending standards, entrepreneurs turned, by necessity, to alternate funding sources. They discovered, often to their surprise that factors were not only eager to say yes when a banker said no, but that they offered other services as well, notably collections and free customer credit checks.